PUBLIC HEALTH EXPENDITURE CONVERGENCE ACROSS INDIAN STATES: NEW EVIDENCE FROM LM AND RALS-LM TESTS

Abstract

This study examines the total per capita health expenditure convergence across 25 Indian states by disaggregating total per capita health expenditure into revenue and capital health expenditure. This study uses the recent Lagrange Multiplier and Residual Augmented Least Squares-Lagrange Multiplier unit root and club convergence tests. Results of unit-root tests indicate the evidence of convergence for aggregate per capita health expenditure and its compositions. The speed of convergence of total per capita health expenditure is found to be approximately 0.15%. Results from sub-panels reveal that special-category states are converging. Based on the findings, it may be appropriate for the central government to design the equalizing transfer system and revisit poor states’ per capita health expenditure patterns.